By Susanna Twidale and Barbara Lewis
STRASBOURG, France (Reuters) - The European Parliament on Wednesday approved a proposal to begin reform of the world's biggest carbon market in 2019, clearing the last major hurdle before the plan can become law.
EU carbon allowances at around 7.50 euros per metric ton were little changed after the vote, which had been largely expected.
Discussions have dragged on for months over the proposal to begin operating a Market Stability Reserve (MSR) to remove some of the surplus of carbon allowances that has depressed prices on the EU's Emissions Trading System (ETS).
Ivo Belet, from the center-right European People's Party, who has steered the debate in parliament said the vote was "an extremely important step" and had strengthened the credibility of the European Union ahead of climate talks in Paris at the end of the year.
"The Greek crisis is so urgent that it puts everything else aside, but climate is something that cannot wait," he said in a debate early this week.
Following the vote in a plenary session of the Parliament in Strasbourg, the reform only requires a sign-off from member states to become EU law.
It involves setting up a Market Stability Reserve to store surplus carbon allowances that have piled up due to oversupply and economic slowdown.
The reserve also could release the pollution permits in the event of higher demand.
Jos Delbeke, director general of the European Commission's climate action department, said as many as 1.6 billion allowances could be removed from the market where a surplus of them has depressed carbon prices.
(Editing by Louise Heavens)